This is the first draft of my Seattle Journal Of Environmental Law comment. While I have tried to stay true to the evidence, it is still a working paper. I'd appreciate any comments.

Casey DuBose

China's New Rice Bowl

“Solving the problem of feeding around one billion people must be continually designated as a high priority in running the country well and maintaining peace.” State Council, 2009.

In 2007, the Chinese Communist Party (CCP) capped 30 years of economic liberalization with a revolutionary land law. This law, the Property Law of the People’s Republic of China, granted the private acquisition of land-use to both foreign and domestic private parties. Starting in 2008, agricultural collectives, which traditionally had limited ability to individually transfer their land use from agricultural to urban or industrial, began to contract their rights to non-agricultural developer, under a similarly revolutionary policy statement - Decision on Certain Issues Concerning the Advancement of Rural Reform and Development. These laws had the aim to help flatten the economic disparity between the increasing rich urban population and the increasingly marginalized peasant agricultural class. Their goal was to spur the development of modern agriculture and promote the construction of a “new socialist countryside.”

Unfortunately, the last 30 years of economic growth has taken a hard environmental and social toll on that countryside. Spurred by a great flood of cheap, migratory labor leaving the agricultural areas, and years of industrial development, agricultural land has been converted to residential, commercial and industrial land at an unprecedented rate.

This conversion, which has been accomplished through both legal and illegal means, has effected China's grain security, contributed to increased agricultural pollution, and created large groups of landless migratory workers. Existing laws have provided a framework to limit the conversion of agricultural land, but their language and enforcement is inadequate. Indeed, changes such as the 2008 Decision have inadvertently exacerbated a growing problem of agricultural land destruction. With available arable land at an all-time low and an ever-increased rate of conversion, the Chinese government must make the conservation and regulation of agricultural land a high priority.

Faced with this host of legal, environmental, economic and social problems, China has recently taken strong policy and administrative measures to stem the tide of agricultural land destruction. Recent policy statements by the State council, administrative regulations, and high-profile cases against domestic corporations are the beginnings of a crackdown on illegal use of agricultural land.

While some have argued that these changes are only a temporary crackdown and will not bring lasting solutions to China agricultural problems. I will argue these recent actions represent a shift from unregulated growth to a new era of agricultural modernization and environmental protection.

Continued after the break

(Many of the materials referenced throughout this paper have no official English translation. The quoted language in this article is based on unofficial translations that I have studied and believe are reliable. In some cases, I have provided my own translation. In either case, I have provided a citation link to the original document and translation, if available, for review. Additionally, as legal search platforms do not support Chinese characters, I have provided the pinyin romanization in-text followed by the characters in ellipses.

Additionally, the traditionally western understanding of farming to be a profession, complicates the translation of these documents. The term nongmin (农民) is often translated as farmer. However, it is important to understand that Chinese use the term to represent a class/caste distinction, which is not represented in the term “farmer”. The term is better translated as peasant or peasant-farmer. Thus, those who live in agricultural communes are not just farmers, but also members of a peasant class, and not often treated equal to the urban/industrial class of workers in the city. However, in this text, to minimize repetition, I will use the titles interchangeably.)

Agricultural land use policy in China has had an interesting developmental history from its communist roots to its current system of property ownership that is legally unique from any other country's system of property ownership. To understand this transition, I will briefly review the historical development of agricultural land use in China, then elaborate on the modern day policy of land use rights under the Land Administration Law and the Rural Contract Law.

1949 – 2002

After the expulsion of the Nationalist Government following World War II, the Chinese Communist Party Government started to consolidate power throughout country. Through the early fifties, the CCP consolidated peasant land holdings into large agricultural cooperatives. These cooperatives generally contained about 160 households, which were eventually merged in great “peoples communes” with close to five thousand households. Using this land, village collective cooperative organizations engaged in shared grain production. Working together as a team, the collective would share equally in the harvest or earnings at the end of each year. Unfortunately, this equal-treatment system limited initiative and resulted in depressed levels of grain output.

The final years of the Mao era brought China agricultural shortages and social unrest. As Mao's successor, Deng Xiao Ping, rose to power, he was faced with grain shortages in provinces throughout China. Deng started a program of dismantling the rural collectives by shifting production from communes to individual households. During this period of “reform and opening up” the CCP instituted the Household Responsibility System. Under this system, village cooperative organizations contracted “allocated land-use rights” to individual households for individual use and production. These rights were initially contracted to the farmers for a short period of one to two years, but by 1984 the rights were extend to periods of 15 years.

This system was ultimately successful in raising grain production. By granting farmers decision-making freedom and a contracted ownership of the land, it generated production incentives, and between 1978 and 1984 grain output increased at a rate of 13.8%.

On October 14, 1998, the CCP's Decree on Major Issues Concerning Agriculture and Rural Areas expressed a commitment to renewing the use of this land contract system for another 30 years. This system was not replaced until the Law of the People’s Republic of China on Rural Land Contracting was promulgated in 2002, which provided greater freedom of land contract by allowing individual households within the economic organizations to independently contract, transfer and lease their land use right.

Allocated Land Use Right

This system of land use rights, which started with the allocated rights of the Household Responsibility System and developed in the modern granted land use rights under the 2007 Property Law is unique from the property laws of other countries. Land use rights have a unique legal structure. Unlike the traditional view land ownership in western countries, land cannot be privately owned in China. The Constitution of China provides that “[l]and in the cities is owned by the state. Land in the rural and suburban areas is owned by collectives.” Thus, land is either owned by the state or one of the agricultural collectives. .

Whenever land is bought or sold in China, all that is transferred is a non-ownership interest in the land. This non-ownership interest is commonly called ‘the right to the use of the land’ or ‘land use right.’ These land use rights have been compared to various the civil property law concepts like a usufructs, superficies, and long-term leases. However, ultimately, the Chinese conception of land use rights is unique, which is seen in its limited alienability, use restrictions, and heritability.

As all land is owned by the state or agricultural collective, Chinese property law allows non-state entities to use the land under limited conditions and only for certain purposes. These purposes include the right to the exploitation of acquired land, the right to the use of building land, and the right to the use of farming domestic plots.

These rights were originally distributed through a system of government allocation and, as such, are generally termed “allocated land use rights”. Allocated land use rights were distributed by the Chinese Government for free, but required the development of the land for a specific purpose. Thus, land would be allocated to a company for a specific purpose, e.g. to build a coal power plant, but the government reserved the right to reclaim the land if the company developed a different use for the land or whenever the government “perceived a greater public interest.” The owner would be compensated for any improvements he made to the land, but nothing was paid for loss of the land use right. Additionally, allocated land use rights could only be returned to the government, they were not freely alienable nor transferable to a third party. Id.

As the government, led by Deng Xiao Ping, started privatization, it allowed for development under a scheme of granted land use rights. Granted land use rights held some of the restrictions of the allocated land use right, but allowed for greater alienability of the land. As with allocated land use rights, granted land use rights may be acquired from the government via a direct negotiation and purchased for a set fee. However, to combat problems of corruption with direct negotiation, the law requires some form of government auction when commercial land use is at stake or where there are clearly two or more parties interested in the property.

Granted land use rights are limited to a specified period of time - 40 to 50 years for industrial and commercial uses, and 70 years for residential uses. During this period, owner of the land use right can not hold it for speculation and is expected to promptly develop the land. To this end, a holder of a granted land use right cannot resell or transfer the right until he has finished the expected development.

Transfer of Agricultural Land

Up until Law of the People’s Republic of China on Rural Land Contracting in 2002, the government placed stronger restrictions on land owned by the collectives and did not allow private transfers of agricultural land. Instead, if land that was owned by an agricultural collective was to be developed, it would first need to be converted to industrial use by the local land administration through a system of eminent domain conversion.

Land that is classified to be used for agricultural purposes and is currently being used by the members of the agricultural cooperative must be converted by the local Land Administration Authority via eminent domain to industrial use. If the Land Administration wants to requisition the land, the approval of either the municipal or county government is needed before an official public announcement regarding requisitioning of the land can be made. Upon completing the requisition, the Land Administration will change the classification of the land to the use contemplated by the land use plan (e.g., from agricultural use to industrial use). The Land Administration will then open the process for bidding, auctioning or acquisition of the land use rights in accordance with the pertinent regulations.

Unfortunately, this process of conversion is tarnished by many layers of corruption. All members of this hierarchical approval system, from the town up to the provincial level, profit from conversion and subsequent conveyance of the expropriated land to the developer. Senior officials share in the profits and do not take steps to limit excessive amounts of land conversion. Indeed, even those who support quotas are often thwarted by lower level officials who misreport and hide conversion statistics. Many avoid the approval process by dividing larger projects into smaller ones to stay within the quotas, or classifying expropriations of rural land for public use, but quickly reselling the land for commercial development.

Powerful local party officials are induced by local economic development to the point that their interests are often not aligned with central reforms. This cycle of corruption has had serious environmental and social effects on China's agricultural areas. It has forced the central government to step in and take control of corrupt provincial land administrations and caused many high-level provincial and city official to be demoted, fired and even jailed for corruption.

Arable land degradation

Unlike the United States, and contrary to what some believe, China is not rich in natural resources. With only 7% of the world's arable land, China must feed approximately 22% of the world's population. Moreover, China continues to lose farmland through soil erosion, decreased soil fertility, and steadily expanding urban encroachment.

Finding accurate estimations of arable land resources in China has been difficult. Indeed, until recently, with the publication of the first national survey of China's land resources in 2000, China has had no reliable statistics on non-agricultural land use. However, with the Government's increased focus on the problem of agricultural land loss, scientists have been able put together estimations of the scope of the problem.

The Bureau of Statistics estimates that as of 2009, China's arable land stood at 1.83 billion mu (approximately 122 million hectares). This figure represents a significant decrease in amount of available arable land. One researcher, reviewing the reduction from 1996 to 2005, estimated the total reduction to be 7.96 million hectares. This is despite an increase in population of 90 million people. As compared with other developed nations, China has a lower ratio of arable land to population. China is estimated to have .10 hectare of cropland per capita while the US maintains .47 hectare per capita and EU maintains .69 hectare per capita.

Additionally, use of land for non-agricultural purposes is most intense in China's most fertile areas of cultivated land, e.g., along the east coast and the pearl river delta, which contains less than 10% of China's territory but accounts for 22% of its cultivated land.

Rapid growth as also attributed to increased land pollution. As agricultural land use has decreased, the need for high grain output has increase. As a result, Chinese farmers have developed an “over reliance on the input of chemical fertilizers and pesticides.” The consumption of chemical fertilizers and pesticides has shown a pronounced increase over the last few years. Indeed, China's consumption of pesticides far exceeds the average level worldwide and China's consumption of fertilizers per hectare far exceeds safety limits of developed countries for agricultural application . This overuse of fertilizers and pesticides could result in a serious decline of agricultural production.

Additionally, industrial pollution has contributed to the arable land destruction, some estimate up to one sixth of China’s arable land is polluted by heavy metals. China is the world’s number one consumer of coal, number one producer of greenhouse gases , and produces more SO2 and particulate matter than all of Europe. These compounds contribute to acid rain which damages crops, changes soil composition, pollutes waterways.

Further contributing to decreased agricultural yields is the mismanagement of grassland resources and desertification. Desertification has reduced range land resources, and increased the impact of sandstorms which result in salt deposition on productive land, sedimentation of waterways and flooding. Erosion and salinization have increased since the 1970s and more than 40 percent of China arable land has degenerated due to soil erosion and desertification. Currently, close to 360,000 hectares of land becomes desert each year.

These problems have led the State Council to order a prohibition on use of primary farmland for construction. Indeed, in 1998, the Land Administration Law underwent a major revision and stated that the “[m]ost sparing and rational land utilization and earnest protection of cultivated land constitute China's basic state policy.”

The government also implemented an overall land use plan which strictly limited the amount of agricultural land allowed to be converted to use for construction. It set goals to slow significantly the pace of land conversion to non-agricultural use and called for a decline of 30,000 hectares by 2010. However, as these goals have seen little administrative enforcement and with widespread agricultural expropriations, these targets have proven to be unrealistic. There has been zero net decline in agricultural conversion in the major population centers of China – Beijing, Tianjin, Shanghai, Jiangsu and Shandong.

Inefficiency and Leapfrogs

Paradoxically, the transfer of land use rights to individual households and limiting the conversion of agricultural land use may contribute to inefficient farmland allocation and excessive conversion.

Although the Household Responsibility System produced short-term growth, some weaknesses have become apparent since its implementation. The fragmentation of the land use rights resulted in smaller farming plots. An individual plot averages between 1 and 1.6 acres of land. As these plot produce small amounts, farmers do not have the capital to invest in advanced technologies or build sufficient infrastructure to effectively and efficiently use the land.

Compounding this problem is the scatter shot or leapfrog development that isolating agricultural development. Under the current system, the designation of farmland is based on historic land use. Thus, farmland is likely to be located on the borders of the major population centers. As these urban centers continue their growth, the prohibition of agricultural conversion results in a leapfrog effect. Urban centers hop over the agricultural belt and into historically underdeveloped areas. This leaves agricultural island villages that are increasingly isolated and surrounded by industrial expansion. This is especially poignant in the Pearl River Delta area, where urban sprawl is slowly merging the cities of Shenzhen and Guangzhou.

This is exacerbated by the wage disparity between agricultural laborers and urban laborers, which has caused many younger workers to abandon their farmland for better wages in the city. The CCP estimates that more than ½ of the rural labor force is not engaged in agricultural production, but rather engaged in large manufacturing plants within and surround the urban population centers. Additionally, as farmland is illegally expropriated, the traditional peasant class has been left landless. These estimated 70 million landless peasants have left their agricultural base and joined the migration to urban manufacturing.

Corruption, landless farmers, and social unrest

In addition to the environmental effects of agricultural land conversion, farmers in China been subject to government evictions and seizures which have resulted in significant rural discontent and in increasingly more instances of violence.

In recent years, there have been many thousands of land dispute cases. The Ministry of Land and Resources reported more than 168,000 cases of “illegal land seizure” in the first eleven months of 2003, which constituted a marked increase from the previous year. The problem of land disputes is now one of the main cause of peasant grievances that lead to complaints and unrest. Estimates, verified by the CCP, put rural riots in 2005 at 230 a day, which total more than 80,000 uprisings per year. These riots, while characterized by the Chinese media as “mass incidences,” have erupted over land disputes, local corruption and environmental decay.

Much of this is spurred by the decentralization of local land management and competition between different provinces in the PRC. Local government officials that show greatest investment in their province or city are ranked as the most successful. This not only increases the economic clout of their city or province, but also brings with it great personal prestige and political power. Thus, competition rages between different provinces in the PRC, each competing with the other to attract private investment.With this incentive to draw investment, local leaders have displaced many residential communities under the auspices of the greater good and an overall increase in the quality of life.

However, these increases of quality of life are often a guise to hide the greater motivation of personal profit. There is a strong incentive for local officials who often negotiate with real estate developers to form loose profit sharing partnerships in the development. This is especially effective, when a developer encounters residents who are unwilling to sell their property. The developer, for a bribe, can employ the local government to take the land for a “public purpose.” In an environment of loose enforcement, this public purpose is often loosely defined and unsubstantiated. Indeed, the existing law allows the local government define both the public purpose and the amount of compensation necessary to perform the taking. Additionally, while a collective or individual farmer who objects may litigate the amount of compensation for the expropriated land, there is no process to obtain an injunction to stop the development. Thus, the action of the court is of little help to the farmers, who may not see settlement until years after their property has been destroyed and redeveloped.

Policy response

For the past seven years, the government has used its annual first policy release to highlight agricultural issues. It has done this through a joint proclamation by the Chinese Communist Party and the State Council. For the first four years, the CCP highlighted economic and technological development. But, since 2008, there has been a marker shift to agricultural protection.

These initial documents centered on economic problems of the peasant economy. The 2004 document states, “[a]mong the many problems facing agricultural and rural development, the difficulty of increasing farmers' incomes is the most prominent." The document also prescribed that raising agricultural incomes was key to maintaining China's economic growth and stressed that raising farmer's incomes were a significant issue both economically and politically.The 2005 document followed this by emphasizing that agriculture remained a weak link in the national economy. It included measures to ensure financial, governmental and technological support to improve agricultural production capacity.

The 2006 document emphasized social development in agricultural areas. It included goals to boost efforts in developing modern agriculture, boosting farmers' incomes, enhancing rural infrastructure, promoting social causes in rural areas and deepening rural reforms.The 2007 document furthered this by advocating for a “new socialist countryside," which would contain modern equipment, science and technology, industrial systems to improve the quality, economic returns and competitiveness of agriculture.

In 2008, China crossed a threshold. Since 2004, it had seen quarters of agricultural deficits with the United States , but in 2008 it became a net food importer. This figure was alarming “to a government that views its ability to produce enough food for its people as a critical component of its national sovereignty.”

In late 2008, the government changed it's tone and focused on agricultural preservation and grain supply. It promulgated a number of documents and state council decisions that have emphasized preservation, and served as base for prosecution of corruption and illegal land use.

The first document was the 2008Decisions on Major Issues Concerning the Advancement of Rural Reform and Development [2008 Decision], which emphasized that “solving the problem of feeding around one billion people must be continually designated as a high priority in running the country well and maintaining peace.”

This policy was designed to lift of the lagging incomes of the 750 million peasant farmers in the countryside by encouraging them to lease and transfer their unused and underused land-use rights. Although the right has been available to farmers for a few years time, since the Rural Contracting Law of 2002, it had not seen much use on the individual level.

Asmany farmers have abandoned their land for the cities and left much of the land under-utilized, this law creates a market for the land by allowing four methods of transfer. The four methods include: subcontracting the land to other farmers, leasing the land to other for agricultural development, swapping land-use rights between farmers, and transferring land use rights to other with no right of reclamation. The CCP hopes that with the creation of this market the arable land will be use more efficiently to increase domestic agricultural output, and provide a source of income to rural farmers who have migrated to the urban areas.

Additionally, a pilot project in Guangzhou has attempted to remove the government conversion step entirely, and allow farmers to deal directly with developers. This liberalization of the land has removed the government and its attended corruption from some agricultural land transactions. However, commentators have suggested that this law, while attempting to limit agricultural conversion, will provide more loopholes for conversion, and while the law tries to draw a distinction between agricultural and construction land, it may lead to decreased oversight and opens a new pathway for conversion to construction land.

To combat this fear the CCP, has further promulgated restrictive policy statements and a comprehensive land use plan to provide a solid framework to police land transactions under the 2008 Decision and the Rural Land Contracting Law.

Comprehensive Land Use Plan

The 2008 Decision by the State Council was accompanied by a 14-year national land use plan. The National Land Use Planning Framework (2006 – 2020) replaced the previous framework from 1997 – 2010. This plan emphasizes food security and farmland protection, through a strategy of promoting rational land consumption, farmland protection, central management of land development and conservation. The Framework defines national land use strategies, specifies the government's goals and regulatory tools in managing land use, and guides the society to conserve and utilize land resources in a rational manner. The land use plan is the highest administrative land management document and a guideline for implementing large-scale land use control, planning and development.

Divided into many chapters, chapter three of the document details the plan to control the loss of arable land and sets a red-line goal to maintain at least 1.8 billion mu (about 300 million acres) of farmland nationwide. ch. 3. This will be accomplished through strict control of cultivated land loss, and a national implementation of ecological restoration projects.

The means of increasing the amount of arable land in China be accomplished under a reclamation plan. ch3. Sec2. All land that is expropriated will be required to be compensated under this system. Any land that is expropriated for construction must compensated by the reclamation of agricultural land in another area of the region or municipality. Thus, if 100 acres of agricultural land is destroyed by a construction project, 100 acres must be developed as agricultural land in another area of the locality. This requirement will be strictly enforced with an emphasis on corporate accountability. Strict implementation of the basic farmland protection system and compensation system is emphasized. All replacement land will be in accordance with the "Replenishment before development" xian bu hou zhan (先补后占) principle, thus, replacement land will be evaluated for quality as well and quantity. ch3 sec3.

Additionally, since much land has been lost to natural disasters, including the Sichuan earthquake, the Framework emphasizes structural improvements to prevent disaster impact, e.g. methods to lessen the possibility of earthquake related landslides. The plan also sets goals to speed up post-disaster land reclamation. ch3 sec2.

The plan also promotes a national plan of agricultural land consolidation. Through a process of reclaiming mining areas, polluted waterways and developing previously undeveloped farmland, the government hopes to open up an additional 6000 acres of farmland. ch3 sec2.

The plan provides renewed construction, consolidation and investment in grain producing basic farmland. It outlines a plan to concentrate investment in basic farmland construction through public finance and the creation of basic farmland protection zones. To support this effort, the plan emphasizes farmland consolidation, improving production conditions, and improving the quality of basic farmland through the comprehensive use of economic, administrative and other means. ch3 sec 4. This includes programs to improve the quality of agricultural land through a national systematic categorization of types of land, e.g. rice paddy, low-yielding farmland, and drought prone areas. This land will be managed to protect the quantity, quality and ecological requirements of various categories of land. In addition, it advocates thorough water resource protection through water conservancy, terracing, and soil fertility projects. ch 3 sec 4.

The Framework emphasizes cooperative management of various other land uses in China. This includes a focus on developing high-quality fruit and fruit products. The strict protection of forest land through increased management of forest land, and the expansion of existing National Forest and protected areas. It advocates the full use of barren hills and slopes for reforestation, and Administrative measures to prevent requisition, illegal occupation, deforestation of forest land and land under forest reclamation projects. ch 3 sec 5.

It promotes the comprehensive improvement of pasture land and conservative use of pasture resources to prevent overgrazing. It strictly prohibits indiscriminate digging, and the excessive brush clearing for farming. Further, it outlines plans to strengthen and consolidate livestock occupied land into large livestock market districts, which will use waste land, barren hills, slopes and other unused land. Ch 3 sec 5.

Finally, provides measures to ensure plan implementation. It emphasizes the strict implementation of a goal-and-responsibility system for farmland protection and economization and the strengthening of the overall control function of the general land use plan. It also advocates the development of a market adjustment mechanism for farmland protection, advanced land use planning legislation, and a nationwide adoption of similar land standards and use policies. Finally, it advocates the improvement of public involvement in planning decision-making through grassroots advocacy and democratic processes in land use planning Ch 5.

This new land use plan and the 2008 State Council Decision are supported by the most recent primary policy statements in 2009 and 2010 . In 2009, the CCP's document's theme was "achieving steady agricultural development and sustained income increases for farmers." It stated that “the strictest system for the protection of agricultural land and the strictest system for economizing land use” must be implemented in each village.

The 2009 document highlighted challenges posed by the global downturn to agricultural and rural development stating, "[t]he biggest potential for boosting domestic demand lies in rural areas; the foundation for securing steady and relative fast economic growth is based upon agriculture; the toughest work of securing and improving people's livelihoods stays with farmers." The government urged authorities to take resolute measures to avoid declining grain production and to ensure the steady expansion of agriculture and rural stability.

The 2010 document supports administrative enforcement and states the CCP must be prepared to prevent neglect or relaxation of the efforts to ensure that food production does not decline, farmers income does not slip, and “the momentum of development in rural areas is not reversed.”

Thus, the CCP has emphasized that it will work to stabilize and improve the Party's basic rural policies, strengthen the agricultural and rural infrastructure, and lay a solid foundation of agriculture and rural development. To that end, 2010 policy placed the protection of grain supply by allocating resources to agricultural protection and development at the top of the list of proposed reforms. This included a farmland use tax rate increase to provide additional revenues for agricultural development and an increased new construction land use fee, which would be used to conduct special land use investigations.

Taken as a whole, these documents have formed a strong policy backbone, and while policy documents are not the binding equivalents of law promulgated by the People's Congress, they are often treated as law. In this case, various central regulatory agencies have used this framework to begin a crackdown on illegal land use throughout China. This crackdown has seen the confiscation of illegally transferred land, the jailing of party officials, and the fining of many companies.

Administrative Enforcement

China's enforcement body for illegal land use is the Ministry of Land and Resources. It has been spearheading the crackdown on the illegal land use. In 2009, the ministry investigated 2,200 people and confiscated 19.24 million meters of illegal buildings. Starting in 2010, the Ministry of Land and Resources ramped up its investigation and prosecution of land use violations and rolled out a nationwide land use inspection in 155 cities. Spot checks by the National Audit Office found illegal land acquisitions in half of the surveyed cities. In many cities, governments were found to be faking figures about available farmland. Seven cities acquired 2,600 hectares of collective-owned land without going through proper procedures and government was able to reclaim 2,100 hectares of land, and 336,500 square meters of illegal construction.

Further, investigation into the corruption led to 5,241 officials receiving CCP disciplinary penalties and 3,058 cases were transferred to the judiciary for corruption charges. Government officials were found have taking bribes, “in the forms of cash, gold, houses, luxury cars and stocks, among others.” As with many instances, the corrupt land management authorities were found to manipulate both sides of the real estate transaction controlling both administrative approval and administrative law enforcement. As of November 2010, the ministry had found over 18,000 instances of illegal land use.

BYD

This year's investigation into a plant under construction in Xi'an by Auto Manufacturer BYD biyadi (比亚迪) is an example of the high profile that China is making of illegal land use. The case carries many of the hallmarks of illegal land use and arable land destruction – from provincial corruption, to central direct investigation and political scapegoating. Indeed, the investigation has garnered much attention in both the Chinese and Western media, and the final decision surprised many with its size and effect.

BYD Auto is the largest domestic auto manufacturer in China. It is considered one of the most successful auto companies in China and has plans to be the first Chinese manufacturer to develop cars for the US market.

In an interesting paradox, the company prides itself in its environmental initiatives. Its parent company BYD is the world's largest producer of rechargeable batteries. BYD Auto was the first auto manufacturer in the world to mass produce a plug-in hybrid vehicle. This unique company made headlines in the western media when, in 2008, Warren Buffet spend $230 million to purchase a 10% stake in the company.

Spurred by the continued growth, BYD auto announced, in the summer of 2009, the construction of a second auto manufacturing plant in Xi'an, China. The development of the plant was expected to increase production by 400,000 vehicles annually.

This plan was supported and by the Xian county government, which jointly issued a project implementation plan and set up an office in the county administration building to oversee the land conversion and resettlement.

Through the summer of 2009, it oversaw the resettlement of seven villages in the construction area. Under the land compensation and resettlement agreement, the land administration expropriated 4369.2 mu of land. Of which, cultivated agricultural land comprised 3972.05 mu. Those who were resettled received 21,300 yuan per mu (at current exchange rates approximately 19,167 USD per acre). The final payment was made by end of Fall 2009 and construction commenced in December 2009.

In July of 2010, the National Ministry of Land and Resources announced it would investigate allegations against four serious violations of the land resource law. The BYD development was listed as one of the violators as well as the local government land development enterprises and the Shaanxi Provincial Department of Land and Resources.

At the time of the administrative action, seven buildings on the Xi'an campus were under construction including the plant, dormitory building, mixing station, and plant roads. These buildings occupied 736.65 mu of land, including 681.03mu of cultivated land.

In September, as western media broke the story, commentators waited to see if this investigation would have any teeth. The author of the China Environmental Law blog and a practitioner of environmental law in China stated, “[m]y sense is that this effort is part of an episodic "strike hard" campaign, but I'd bet BYD gets off with a fine.” Another commentator Zhang Xin, an auto analyst with Guotai Junan Securities in Beijing, cited the size and importance of BYD as a member of a key Chinese industry, and stated "[a] lot of companies are watching the case closely, and it will set an example. If the government lets BYD off the hook easily, the illegal usage of land won't be effectively controlled."

The likelihood that this investigation would be minimized, or made to go away, was increased as the original date chosen to report the verdict corresponded with Warren Buffet and Bill Gate's trip to China. During that trip, the billionaires met with China's richests citizens to drum up support for their philanthropic organizations. However, 13 days after the original decision deadline, the Ministry published their decision.

The investigation found that supervision and regulation was lacking in all aspects of the land transfer. That the government failed to follow the established land use standards in the conversion through eminent domain and that BYD illegal occupied and developed the farmland. The Shaanxi Provincial Government was found to have not completed any investigation into the impacts of the development.

Following its stated policy of punishing the chief leaders of governments of cities where land and regulations laws are seriously broken, the Ministry removed the leader of the Provincial Department of Planning from his position, while many members of the department were demoted and punished within the organization. Similar problems were found within the Xian Municipal Government and administrative actions were taken against the leaders of those departments.

In light of these problems, the investigation found that BYD expansion project failed to abide by the most recent standards of land use planning. The Ministry ordered the confiscation of all the illegally occupied land, the newly constructed buildings, and imposed a fine of 2,946,600 yuan.

Commentators have been surprised at the size and impact the decision. BYD had long been considered a politically protected company and a jewel of Chinese development. Indeed, it is likely that the fine and action against the company was lessened due to its political connections. However, the verdict has still sent a warning to domestic companies and, especially, foreign companies. The author of the China Law Blog commented that foreign investors should be especially wary of pursuing projects with dubious land develop backgrounds because if China was not afraid to go after a prime domestic industry, it would be all-the-more likely to go after foreign enterprises

Additionally, this decision, and the corresponding crackdown on corruption, is likely to have a strong effect on the provincial and municipal land administration ministers. A dozen of which were censured as a result of this case, and a few of which were removed from office.

Implications and predictions and prescriptions

Since 1958, there has been a steady decrease of available arable land. The reality is that these statistics are not improving. Already a net importer of food supplies, China is quickly approaching its red line of 1.8 billion mu of agricultural land. ch. 3. Indeed, most recent government estimates put the arable land at 1.805 billion mu.

This problem is one that this Chinese government has taken seriously. It has used its primary policy statements to highlight this issue and followed up with comprehensive laws and resource plans. Additionally, the government has supported its administrative agencies as it has investigated illegal land use and corrupt land administrative practices.

However, China must still dissolve the incentives that drive provincial leaders to corruption, raise the burden on industries that pollute and destroy arable land, and create a mechanism to reclaim land that has been polluted and destroyed.

The 2008 Decision and the Rural Contracting Law have created the framework for dissolving the incentives for corruption and illegal expropriation under the guise of public good.

A pilot project in Guangzhou is allowing peasant farmers to contract directly with developers to develop the land. Direct contracting will likely raise development prices and allow for the peasant to have more say in development.

However, these changes will not be made successful without an effective and centralized registration system. Although China has required written documentation of rural land land rights since 1997, few farmers possess these documents. Without the documentation, many farmers are afraid to participate in the reforms of the 2008 Decision and Rural Land Contracting Law. Indeed, a survey by the Rural Development Institute in 2005, found that just 45 percent of polled farmers had been issued written land-use contracts to their land. A working registration allows for the formation of a land market, which leads to improved transparency, predictability and reduces land-use disputes.

This problem is exacerbated by the lack of a rural education system to teach peasants about their legal rights to the land. Many do not know that they may participate in the land planning process, or that they may transfer and consolidate land use rights throughout the community. Without that knowledge, the central government is missing the enforcement power that comes from grassroots activism and collective litigation against corrupt agencies.

Indeed, CCP has recognized this problem and addressed it through their primary political statements and the new land use plan. It has stated that land use plan revisions should adhere to democratic decision-making processes and emphasized the establishment and improvement of a public participation system. Further, it has required that all land use plans be published and available for public review. However, it remains to be seen if these policy goals will be enforced and supported by the central ministry and peasant population.

To further this enforcement, the government should adjust the existing administrative punishment and statute of limitations law. The current Administrative Punishment Law limits the kinds of punishments that may be dealt to land violators and limits the statute of limitations to violations that are discovered within two years of the violation.

Unfortunately, the Ministry does not often find out about these violation until many years after the development. Indeed, as many of the investigations have not been pursued until recently, much of the destruction has already fallen outside of the statutory period. This issue was addressed in a Supreme People's Court Committee opinion, which stated illegal land use presented a special case. If the use has been continuous, and the land has not been restored, the court has authorized an evaluation under the punishment statute on a case-by-case basis. While the Court has outlined some punishment considerations, (e.g., length of time of the violation, type of violation, ill-gotten gains from the violation) there is no standardization of punishment. Thus, some violators like BYD will have their buildings confiscated, while other long existing violators will be levied fines for a violation which is calculated only on the statutory period of two years. This ambiguity allows existing developments to operate, often with impunity, and make the Ministry’s enforcement all-the-more difficult.

Finally, the government must push forward stronger air and water pollution laws. As we have seen above, pollution contributed from non-agricultural and agricultural sources is decreasing the production of arable land. Soil contamination has reduced crop yields, tainted the food supply, and created a source of pollution for ground and surface water.

China recently began its first soil pollution survey in 2006 which assessed soil quality across the country by analyzing the amount of heavy metals, pesticide residue and organic pollutants in the soil. While the final findings have yet to be released, the Chinese government has started drafting a soil pollution prevention law, based on preliminary finding which estimate up to 1/5 of the country's arable land is polluted with heavy metals.

Conclusion

After 30 years of economic liberalization, the Chinese farmer has transitioned from a member of an agricultural commune to a modern landholder with the freedom to transfer, lease, and sell his land use rights. Under the new Property Law of the People’s Republic of China, the Rural Contract Law, and Decision on Certain Issues Concerning the Advancement of Rural Reform and Development, the government has aimed to flatten the economic disparity between the rich urban areas and the peasant agricultural class, spur the development of modern agriculture and promote the construction of a “new socialist countryside.”

However, this economic growth has taken a hard environmental and social toll on that countryside. Through both legal and illegal means, agricultural land has been converted to industrial and urban uses. This conversion has effected China's grain security, contributed to increased agricultural pollution and created large groups of landless migratory workers. With available arable land at an all-time low and an ever-increased rate of conversion, the Chinese government must make the conservation and regulation of agricultural land a high priority.

To this end, China has stepped up to the challenge and addressed this host of legal, environmental, economic and social problems with a strong policy and administrative response to stem the tide of agricultural land destruction. Recent policy statements by the State Council, administrative regulations, and high-profile domestic cases are the beginnings of a crackdown on the illegal use of agricultural land. With these actions, the Chinese Government has started a shift from unregulated growth to a new era of agricultural modernization and environmental protection.

Translated by Tobias Damm-Luhr, Certain Opinions of the Central Committee of the Chinese Communist Party (and the) State Council on Promoting the Stable Development of Agriculture and Continuing to Increase Farmers' Income in 2009 (December 31, 2008), 19 Pac. Rim L. & Pol'y J. 103, 105 (2010) http://www.gov.cn/jrzg/2009-02/01/content_1218759.htm

中共中央 国务院关于加大统筹城乡发展力度进一步夯实农业农村发展基础的若干意见, Opinions of CCP Central Committee and State Council on efforts to increase urban and rural development and further reinforce the foundation of agriculture and rural development.http://news.qq.com/a/20100131/001379.htm

中共中央 国务院关于加大统筹城乡发展力度进一步夯实农业农村发展基础的若干意见, Opinions of CCP Central Committee and State Council on efforts to increase urban and rural development and further reinforce the foundation of agriculture and rural development.http://news.qq.com/a/20100131/001379.htm

中共中央 国务院关于加大统筹城乡发展力度进一步夯实农业农村发展基础的若干意见, Opinions of CCP Central Committee and State Council on efforts to increase urban and rural development and further reinforce the foundation of agriculture and rural development.http://news.qq.com/a/20100131/001379.htm

中共中央 国务院关于加大统筹城乡发展力度进一步夯实农业农村发展基础的若干意见, Opinions of CCP Central Committee and State Council on efforts to increase urban and rural development and further reinforce the foundation of agriculture and rural development.http://news.qq.com/a/20100131/001379.htm

About the Author

A native of Boise, Idaho, Casey DuBose moved to Seattle in 2009 to study law, and he has grown to love living in the Northwest. He is passionate about teaching, learning, and using technology to find novel solutions to difficult problems.

In his current position with Thomson Reuters, he has found a position where to meld my interests in technology, teaching, and law as he works on the Concourse and Serengeti Tracker teams.

Outside of the office, Casey's primary interests are technology, aviation, and Chinese. On sunny days, you’ll find him walking my yellow lab around the Seattle waterfront or flying around the Puget Sound as a certified flight instructor. On rainy days, you’ll find him testing out the local Chinese cuisine with his wife, watching F1 racing, or working on one of his numerous side projects with Ammendment M as a marketing and web design consultant for local law firms. He may be contacted via email, or twitter.

This blog is intended to present news and original research on the growing aviation market in China. For those interested in general articles about China, please see my other blog The Du Family Blog, which is co-authored by my wonderful wife.